In re Ott
| Decision Date | 05 July 1899 |
| Docket Number | 741. |
| Citation | 95 F. 274 |
| Parties | In re OTT. |
| Court | U.S. District Court — Southern District of Iowa |
Julius Lisher, for Scott county.
Wm Theophilus, for Jacob Gadient.
Isaac Petersberger and A. P. Murphy, for opposing creditors.
Louisa Catharine Ott having been duly adjudicated a bankrupt, the county of Scott filed its verified claim and proofs of debt for $181.50, and demanded the debt be entered as having first priority in payment. The consideration thereof is declared to be mulct tax for $150 and interest thereon at $31.50. The facts are not in dispute. The bankrupt was the proprietor of a saloon in said county and three months' mulct tax against her therefor is unpaid, the amount thereof being $150, on which $31.50 interest has accrued. The saloon was situated on premises owned by Jacob Gadient, and, by the statute of Iowa (section 2432, Code 1897), this mulct tax became a lien against said premises, unless discharged by payment. No controversy exists as to the debt having been properly allowed as a claim against the bankrupt estate. The entire controversy relates to the refusal of the referee to order priority of payment thereon. It is conceded that, if the claim is for 'taxes,' within the meaning of that term as used in section 64, cl. a, of the bankruptcy statute, this priority is correctly claimed. This section provides:
'The court shall order the trustee to pay all taxes legally due and owing by the bankrupt to the United States, state, county, district or municipality in advance of the payment of dividends to creditors,' etc.
If this mulct tax is not within said term 'taxes,' as therein used, the claim will be treated as other claims, having no priority of payment, and as entitled to share in whatever dividend is declared in favor of general creditors. Whether said mulct taxes are thus included in said section 64, cl. a, must be determined under the statutes of the state of Iowa imposing the same, and any construction of these statutes given by the supreme court, which may be pertinent to the controversy herein. Chapter 6 of the Code of Iowa of 1897 is entitled 'Of Intoxicating Liquors.' Section 2382 thereof prohibits the selling or keeping for sale of any intoxicating liquor, 'except as provided in this chapter. ' Section 2384 provides that whoever uses any building for the selling of such intoxicating liquor is guilty of a nuisance, and the penalty therefor is prescribed. Section 2385 provides for the issuing of permits to sell and dispense intoxicating liquors, 'for pharmaceutical and medical purposes,' by certain classes of persons, and on certain conditions, in said and other sections following explicitly set forth. Section 2432 contains the following:
'Every person, partnership or corporation, except persons holding permits, carrying on the business of selling or keeping for sale intoxicating liquors, or maintaining a place where intoxicating liquors are sold or kept with intent to sell, shall pay an annual tax, to be collected a 'mulct tax,' of six hundred dollars, in quarterly installments as hereinafter provided, which tax shall be a lien upon the real property wherein or whereon the business is carried on, or where the place for selling or keeping for sale is maintained, from the time each installment of tax as hereinafter provided shall become due and payable.'
Subsequent section provide for the return by the assessor to the county auditor of a list of persons carrying on such business, for the method of payment of the tax installments as the same fall due quarterly, for the certifying by the auditor to the county treasurer of persons and property subject to mulct tax, and for the entry or extension by the treasurer of such certified facts upon the proper tax lists in the treasurer's possession. Section 2439 contains the following:
'After the expiration of one month from the date when such tax becomes due and payable, if not paid, it shall be delinquent and collectible by the treasurer in the same method as that in which other delinquent taxes are collectible, and all the provisions as to the collections of other delinquent taxes shall apply.'
Said and next following sections provide for collection of such delinquent mulct tax by sale (1) of personal property used in connection with or in maintaining the business, and (2) of real property wherein or whereon the business is carried on; and also provide that all the provisions of law as to tax sales for other delinquent taxes (i.e. the general provisions as to tax sales in Iowa) shall apply to tax sales for delinquent mulct tax. Section 2445 provides that the revenue provided for by this mulct tax shall be paid into the county treasury, one half to go into the general county fund, and the other half to be paid over to the municipality in which the business taxed is conducted. But, if the business is conducted in a township outside the limits of a municipality, then such other half is to be paid to the clerk of the township, and the clerk apportions and the same is expended on the highways within the township. Authority is given for the transfer to the county road fund, and expenditure upon the highways of the county, of that half of the mulct tax which is made a county fund. Section 2448 provides:
'In any city, including cities acting under special charters, of five thousand or more inhabitants, no proceeding shall be maintained against any person who has paid the last preceding quarterly assessment of mulct tax, nor against any premises as a nuisance on account of the selling or keeping for sale therein or thereon by such person, of such liquors, provided the following conditions are complied with,' etc.
Here follow provisions as to written consent of electors, the granting by the city council of the request of an applicant for permission to sell at some stated place within the municipality, bond, police regulations, application of the statute to cities under 5,000 population, etc., which are not pertinent to the matter here under consideration. Section 2447 is as follows:
'Nothing contained in this chapter, so far as it relates to the mulct tax, shall be in any way construed to mean that the business of the sale of intoxicating liquors is in any way legalized, nor as a license, nor shall the assessment or payment of any tax for the sale of liquors as aforesaid protect the wrongdoer from any penalty now provided by law, except as provided in the next section.'
The next section (2448) is summarized above. The original statute, which has been codified into these sections, is chapter 62 of the Public Laws enacted at the 1894 session of the general assembly of Iowa, and bears the following title: 'An act to tax the traffic in intoxicating liquors and to regulate and control the same.'
Upon the sections above cited, Scott county urgently insists that the mulct tax falls within the taxes whose payment is given priority in the bankruptcy statute. There is much force in this contention. The assessor, who returns for taxation the taxable property under the general tax laws of the state returns the names of persons and descriptions of property for mulct tax entry. The county auditor, who certifies and delivers for collection to the treasurer the general tax description, certifies and delivers to such treasurer for mulct tax collection the names and descriptions which he has received from the assessor. The county treasurer proceeds to collect, and, when the mulct tax becomes delinquent, the same general provisions confer power for enforcing collection as to the delinquent mulct tax and govern his action, which direct and empower him as to general taxes; and when he has advertised the sale of property for delinquent mulct tax, under the same general statutory provisions as to delinquent taxes generally, he executes to the purchaser at said sale, and in accordance with the general statutes relating to sales of property for delinquent taxes generally, a certificate of tax-sale purchase, which entitles the purchaser, at the end of the term applicable to certificates of tax-sale purchases generally, to a tax deed, executed by the treasurer in the same general manner as other tax deeds, and in accordance with the statutes applicable to other tax sales of real property, which deed carries with it the presumptions of regularity of proceedings which appertain to other tax deeds, is enforceable in like manner and to like extent in the courts, and subject to the same defenses. And, finally, the revenue, whether coming into the county or municipal treasury from payment of this mulct tax, is devoted to payment of expenses or indebtedness incurred in carrying out government purposes; and in this latter point it differs from the revenue arising from grading, sidewalk, paving, or other special assessment proceedings. Briefly stated, the lawmaking power of the state has expressly denominated it a 'tax,' speaks of it and refers to it in the different sections relating to it as a 'tax,' has provided for its assessment, certifying and collecting by the officers performing like general duties as to taxes generally, and in substantially the same general manner, with tax-sale certificate and tax deed, executed under same general provisions and of same general effectiveness as tax-sale certificates and tax deeds on sales for other delinquent taxes; and, lastly, the revenue coming into the county or municipal treasury from this mulct tax is placed with other taxes received therein, and expended, as such other taxes are expended, for governmental purposes. It would seem, therefore, that...
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...States bankruptcy courts to insist upon a state's receiving as a tax under section 64a something which the state declares is not. In re Ott (D.C.) 95 F. 274. But we are mistaken, and if the Singer Co. Case is to be accepted as an authoritative assertion that the charge in question is a tax,......
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...be no question, therefore, of the validity of the tax, or that it is a lien upon the bankrupt's property. The trustee relies upon In re Ott (D.C.) 95 F. 274, where it is held the mulct liquor tax imposed by section 2432 et seq., of the Iowa Code, was not a tax within the meaning of section ......
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...the lien is a collateral feature, provided simply as an aid to collection." The same view was entertained by the federal court in Re Ott (D. C.) 95 F. 274, where tax was said to be merely a charge exacted for the privilege of carrying on the business of selling intoxicating liquors, and not......